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Customer experience vs. fraud - a rock and a hard place?

Across the igaming industry, moves have been made in recent years to take a more proactive approach to making gambling fairer and safer in the UK.

With many regulatory provisions coming into play this year, 2019 is a ripe time to consider if and how your identity verification and digital identity checks are keeping pace.

This in turn, however, raises concerns for operators wanting to maintain a positive, seamless customer experience. Emailage, a global fraud prevention company, saw a need in the industry for a study examining the lasting impacts of these developments on customer experience.

The resulting report, “Managing risk in a player centric world”, produced in collaboration with iGaming Business, asked online gambling operators in EMEA a series of questions regarding their views.

Respondents came from various areas of the igaming sector, providing what Emailage feels is a comprehensive view of the state of play, the opportunities and the challenges.

Experience vs. fraud

In a recent webinar with on leveraging digital identity intelligence, Chris Thomas, managing director of EMEA and Ermal Thaci, enterprise sales director of igaming at Emailage discussed the recent report.

Thaci highlighted the continual growth of the igaming industry, citing reports from Hexa Research predicting Global Online Gambling Revenue will grow to $74bn by 2024, and expressing a view that this continued growth has also brought with it an increase in fraud.

He continues, saying that 94% of operators struggle with fraud, and 84% are unsatisfied with payments systems’ ability to detect fraud.

Additionally, he says: “As we are now used to smartphones, tablets and having multiple devices, we expect a seamless and frictionless customer experience. Any friction we encounter is likely to push us away to a competitor.”

This was echoed by the survey respondents. When asked which was more important to their business, stopping fraud or customer experience, 71% of respondents chose the former, indicating that while compliance is necessary, ultimately operators desire to protect their customers’ experiences.

So at what point in the customer journey is fraud most prevalent? The survey showed 43% of respondents said withdrawal, 30% answered deposit and 27% said registration.

While Thomas said he was unsurprised by the ordering of these, he said: “what surprised me was that registration is still falling into a distant third. A lot of businesses have started to focus more on registration because they realise it’s more cost-effective to catch the bad actor at the point of entry as opposed to the point of exit.”

Notably, 63% of respondents identified bonus abuse as the most negative impact on their business - with the next greatest concern being account takeover at 13%.

Email addresses and digital identity

While ID verification tools came up trumps for survey respondents as a method used to detect fraudulent transactions (53% responded that it was one method utilised), Thomas expressed surprise at how heavily (44%) manual review is used.

“Over the years, I've seen a lot of businesses struggle with manual review. It’s very cost and labour intensive, it doesn’t tend to be particularly accurate and it’s certainly not an optimal customer journey.”

Looking to the future, 63% of respondents said they plan to invest in machine learning platforms in the next 12 months. On this, Thomas says: “Machine learning in itself is a fantastic thing, but it needs a lot of expert help to make it work and it can be very cost intensive.”

Thomas also identified increased interest in digital identity profiling, an area in which Emailage specialises. To make this approach work, he explains that data is crucial, followed by powerful, machine learning analytics and technology to supply the information.

“The reason we focussed on the email as opposed to other unique identifiers is that the reality is, emails are the stickiest piece of data in the digital landscape. On average, over 50% of people have had their email address in excess of eight years.”

He continues: “What we’ve done is a business is build up a network around that data. If we can see the email is nine years old and can see hundreds of data points connected to that email which are all highly positive, this becomes critical for verifying a digital identity.”

The network effect created by this approach, Thomas explains, enables Emailage to build a strong sense of the player at the point of registration, identifying whether they are likely to be a fraudster or not. From this, they can create a digital identity score.

Thaci says the most value you can get with this solution is naturally implementing it at the point of registration: “It means you’re not spending money or resources on bad guys, you can just keep them out straight away and put those resources into genuine customers.”